The world needs economic leadership

Hezi Sternlicht

As the global economy sinks into deepening crisis, the travelling circus of politics has picked up and moved. It appears that after weeks of tiring, burdensome and hopeless European foot-dragging, investors have decided to mix things up a bit with American foot-dragging. The problem is that Washington's foot-dragging is of precisely the same sort. After Brussels managed to prove that discussions can go on endlessly and lead nowhere, it is the Democrats' and Republicans' turn. So how do things look at the moment? Bad, of course. Washington cannot agree on a way to cut the budget, so they have gone on cutback auto-pilot. In truth, this scenario is disturbingly reminiscent of Israel. But in all seriousness, we can take heart from the fact that all the endless bickering merely demonstrates that these are fruitless debates over outmoded economic approaches that are passing out of the world. We need a new way, one that is still unknown and incipient. We need economic leadership.

The marathon discussions over solutions for Greece, Spain, Portugal, Italy, and -- who would have thought -- France, only point to the depth of the swamp Western economies have sunk into.

The same applies to U.S. deficit reduction. It is another bottomless pit, and salvation is a long way off. The basic problem is that there are two opposing economic approaches: a free market, devoid of barriers, and a centralized economy of government incentives.

Both approaches are problematic. The free market failed, leading to the 2008 fiasco. Too much freedom allows greed and excessive financialization to entangle us all in their web. On the other hand, the government does not really know how to incentivize the economy. Money is wasted in an inefficient manner and debts accumulate. We need a new solution, but it is not appearing on the horizon.

We need a solution cut from new cloth. We are seeing the stirring of change in Europe, where Italian Prime Minister Silvio Berlusconi was sent home because of the economy, not his other scandals. Others, too, will pay the price. Meanwhile, the West awaits an economic savior. Although he or she is not here yet, one can assume that he or she will arrive. Perhaps the savior will be speaking Chinese.